Blog for December 14, 2009 [See POST-CLOSE REPORT]

Classic Bill!

If the bear is coming, which it is, the last 50% of the peoples pensions will be completely wiped out.

Primates need to watch and learn........

edit....By the way...C is down big in premarket with huge volume!

:)

XOM - Upgraded to Buy @ Societe Generale

PT Raised:

AMZN - from $120 to $150 @ Jefferies. Buy
GOOG - from $600 to $695 @ Jefferies. Buy

This certainly looks interesting to me, but I know practically nothing about Canadian Mint oversight agencies.

Are they more trustworthy than the U.S.?
Will there be reliable audits?

Anyone see a downside here?

ALOHA !!

All the news I read every day whether it is about Citibank or Dubai or the Euro just causes the LIABILITY BUBBLE to expand at ever higher and faster rates.

Roubini spoke to the US DOLLAR CARRY TRADE again last Friday.

I am convinced that this term "carry trade" be it YEN or USD is just another way to say GARGANTUAN AMOUNTS OF MONEY SLOSHING AROUND THE WORLD or "GAMSAW" for short!

I have to ask one thing about the YEN CARRY TRADE and the US DOLLAR CARRY TRADE. Can there be such huge carry trades without equally HUGE sums of DEBT being printed? Can a "carry trade" exist in a "real" depression?

Then the other half of the "carry trade" equation that is ALWAYS mentioned is the tons of "risky assets" that those trades end up in, yet I have never heard one of these "economists" define a "risky asset" and Roubini is no exception.

Global banks have been imploding due to huge amounts of debt on their books, which the US FED and other central banks have been buying in order to save those banks, but those "bad debts" have yet to be realized, instead they have merely been transferred from one risky laden entity to another. Like a hot potato that nobody wants at par, unless you are Bernanke with a printing press, clicking mouse money. Yet the risk has not gone because the asset still exists. The game plan seems to be to PRICE FIX all markets until pricing and demand returns so that these toxic assets can be offloaded for some sort of a profit.

I believe in less risk not more. I believe in less liabilities not more. As far as I know I have never seen gold or silver, the monetary metals, in bankruptcy court. I have seen Lehmans and I have seen Argentina default and many more banks and countries and some major US companies have BKed as well. In 1933 and again in 1971 the USD defaulted to gold, yet I have never seen a list of gold and silver "counterparties" and I have never seen a credit default swap against gold or silver. Given that Mr. Roubini what asset in the World is less risky than gold? Gold has no DEBT.

If anything these major US Banks that BKed prove DEBT=RISK! Isn't that the definition of "real money"? NO LIABILITIES ... NO RISK. If money has liabilities and risk then that means everything you have ever worked for your entire life is just one great big RISK DERIVATIVE! Money should be a "store of value" not a "store of risk".

Great post! We are now effectively hurling even faster off the cliff, whereas before we were sprinting. Now we are on a bullet train!

If the health care plan follows the financial "solution" I expect to see an open bar set up to "cure" alcoholics.

Keep up the good work!

Volume is strong in this China steel player, which I think is undervalued, trading at about 6 times 2010 earnings estimates.

Kaimu -

Thanks for the rec on 'New Deal in Old Rome.' I just ordered it along with 'Planned Chaos' for some light fireside entertainment ;)

You may find Armstrong's diatribe from a prison cell on Roman coinage and its demise as enjoyable as I did here: http://tinyurl.com/yfezw8k

Cheers.

Well jack black so far you win the prize today. Melt up, at a glacial pace. Are there any buyers out there besides the computers that chase prices oh so slowly upwards? It doesn't seem like it.

Dr. S, thanks for pointing out Bill's XOM review, missed it.

However, based on Bill Cara's discussion, I did not come away with a positive take base on his following statement.

Bill Cara said, "However, for XOM, I think if 71 is broken on the downside with a daily close this week, the Daily RSI-7 will start to fall along with the Monthly and Weekly, which would be very bearish."

Grain troubles figured in HBO's EXCELLENT series entitled simply "Rome" which is now on Netflix. - and Cleopatra's supply of it to Rome, as well as her affairs with Caesar and Mark Anthony, etc. Some things don't change.

It's an incrediblly realistic portrayal of the rise of Julius Caesar, and fall of the republic. Plenty of blood & gore (globe was already warming? LOL)

Casting and acting is excellent, many saucy sexual scenes, but they're not the point. The point is you get a feel for life before Christ in the greatest empire of all times - it too was rotten to the core, endebted, and depended upon plunder from wars.

HBO spent so much money creating sets (recreating the entire Roman forum) costumes, scenes, that they had to shorten the series to 2 seasons. In some ways, this series is better than HBO's other great series, "the wire" because it takes you to an even more foreign world.

There are worse ways to spend cold winter nights.

Telestar3d -

I believe you should factor in today's news with Bill's wisdom and then draw your conclusion.

Stay thirsty, my friend.

being from Massachusetts I can tell you, he's no Republican

No question the news has affected the price action of which it may not have occurred with out it. Personally, I think if you are long term you will do just find purchasing here and now.

Shorter term, it just depends on what pressure the arbitrager's create on the stock.

Any thoughts on selling Jan 2010 65 puts?

NYUGrad,

They are one of his greatest assets and no meaningful action will be taken which is not to their and Obama's mutual advantage.

IMO his calling them "fat cats" was classic Obama playing to us yokels. After the much touted "getting tough with the banks confrontation" this AM the bank guys pledged their cooperation and agreed they have more work to do, blah, blah...

The banks are big contributors and they have probably all toasted their media performances by now.

All is for show.

due to bad crops this year. Can someone who researches agro markets substantiate this. I noticed that COW has bullish technicals as of now.

http://bit.ly/5HXgTS

"Wall St. Bankers Snub Obama, Duck D.C. Sit-Down Because of 'Inclement Weather'"

I am pretty sure nothing is going to change for the better until we citizens make it so.

If I had a meeting with the President tomorrow, I would likely be there today to make sure I am not late. I am sure these weasel CEOs could have setup business meetings for yesterday in DC, so they can spend quality time with Obama today.

FYI - Acela Amtrak gets from NY to DC very quickly! 2 hours flat!
http://bit.ly/8hxFeu

EDIT: These three CEOs didnt go. Goldman Sachs CEO Lloyd Blankfein, Citigroup chairman Dick Parsons, and Morgan Stanley CEO John Mack

1:2, above .25. This type of scalps is done on big shares, no holding for too long

thx for the response. I am going to have a shareholder meeting soon.

Tomorrow we have:

ICSC Same Store Sales
Redbook (more Retail Sales)
Empire State Mfg Survey
Housing Market Index
Industrial Production

Almost all of this data comes out before market open.

I bought back some FEED this morning at $4.59 to average down the shares I bought at $5.01 a couple of weeks ago. I still believe this is undervalued. China hog prices have been skyrocketing lately, breaking out to yearly highs, which translates into higher revenues and earnings for FEED. The pullback recently was on light volume and I think it will have another run when volume starts coming back in. it closed today right around it's 200 DMA.

"It is entirely possible it will take some time for the bank to foreclose. You might consider living in your house for a while longer prior to renting."

Can't recall her name, but a congresswoman from Ohio, I believe, was on the House floor, "If the bank wants to foreclose make them present the actual document you signed. Until they can do that do NOT leave your house."

My neighbor's cousin stopped paying her mortgage last Feb and as of August all that she had was a letter in July saying the bank had noticed she was not paying. My neighbor moved away last month and there was still no action taken. Banks don't want the responsibility for another vacant house, especially in winter.

Best wishes.

NYUGrad, The 'price' of foreclosure is 10 years damage on your credit report. And some employers --especially in the legal and financial services industries--will ask to review your credit to verify no such marks against you exist. Calculate that first.

I'd say mortgage default is a very American trend as many smart folks have added up the joys of home ownership and compared with a very nice rental home in the best neighborhoods (compliments of the foreclosures on that bank's books) with a chance to buy sometime in the future should they like. Strategic defaults like this have given many people their lives back.

The best way to handle a strategic default is to move into a nice comfortable rental and put your home on the market as a short sale...that assumes you owe more than the home is worth today. Your bank will then agree to sell, all going according to plan, to someone who wants a screaming deal. You realistically need to be in default for 90 days before your lender will they sit up and take notice...ie accept a lower offer.*

BTW: Loan modifications are ONLY really designed for home owners (some lenders will consider investors) so if you intend to negotiate with your bank for a lower interest and payment don't move out. You could start lowering your payment to what you can afford while you are in the loan modification process -- but don't quote me on that. My blog on loan mods: http://www.equitytalks.blogspot.com

BTW Example: Saxon Mortgage received $886M TARP funds to modify their bad loans. They have completed 42 to date. At a cost of over $20M per. Follow the money!

*EDIT: Short sale realtors are specialists...be sure you have found a realtor to list your property who has a track record as they will have to negotiate with your bank(s) to accept less and prove this is a win win. They also need to negotiate how the sale is recorded for minimum impact to your credit. State laws vary so DYDD.

Eat or be eaten NYG!
First stop paying your taxes......they're illegal anyway!
Go down to your nearest Best Buy and pick up the current year turbo tax 2010, then give Timmy Geithner a call and see if he will help you cheat the tax system legally.
Cheat...Lie....Steal....and coveth thy neighbors wife....it's the American way.......ha

loannetter, NYUGrad

My son moved into a 1bdrm condo with his girlfriend a little over a year and a half ago. She owned (mortgaged) the condo and bought it in 2006. They moved in together to save money to get married. Any, my grandson came along and they quickly realized a 1bdrm condo, about 700 sq ft was not going to cut it with a new baby so they put it on the market and found out they were underwater on it. They were going to just eat the loss at first when they initially put it on the market. But they have dropped the price and still no takers and a new real estate agent suggested trying a short sale. They got approved and lowered the price again. Still no takers and they need to get out and into a bigger place. After reading the article about people in CA just walking away and renting I'm thinking of suggesting that to them. They are supposed to get married in Nov. 2010 and if she defaults on the loan it will only go on her credit report and my son checked and he can qualify for a mortgage on his own that will get them into a small 3bdrm house. I'm in the camp with NYUGrad and told them that normally it was the morally wrong thing to do. But-there aren't many morals in Washington or the big banking system. I told them to do what they need to do. Stop paying the mortgage and put the money aside for the down payment. Not a nice society we are in now!

I know next to zip about commodities (except that prices of food priced in funny money USD have done nothing but trend up over just about any time frame) but wouldn't rising grain prices etc be a negative for livestock (e.g. COW)?

KC

Good confirming volume right where it began its move out of that consolidation range. Nice example, Vad.

Bigmother,
Have your son and his Fiance looked at renting the condo just to cover payments for a couple of years and ride out their devaluation? Once they are married both spouses will be credit checked even if not qualifying on a mortgage to rule out risk. There is no free lunch.The underwriting systems are not going to look the other way on a foreclosure for ten years. Everything from your car insurance to your credit card rates will be impacted. I will mention my parents managed in a 1 bedroom married student apt when my dad went back to grad school with 4 kids. No pressure to buy X-boxes then of course. Our favorite toys were forts made from a refrigerator box.

Sod covered foxholes? Bloody LUXURY! Guessing you learned how to dig. I'm pretty handy with a boxknife. What are today's kids developing...wrists?

Rode the first one....

Missed the 2nd....

Luggie said: "with the inherent inflation we have brought on ourselves, due to electing leftist leaders over the years"

Lets see, leftist leaders such as Richard Nixon (who took us off the gold standard in 1971) and Bush II whose treasury secretary proposed and got the 700 billion dollar socialist bailout of the banking system? Those leftists?

I think you're still trapped in the big thought-prison of "leftist" vs "right thinking americans" that sells airtime on Fox. Its a nice place to be, it makes you feel so good and validated and - so right-thinking, but the view you have from that place only allows you to see a small amount of truth. You definitely have a lot of company in this thought-prison though; most of America is in there with you - or in the one across the road holding all the "leftists" watching MSNBC for their guidance.

Ever seen a Small Government Republican? A balanced-budget Republican? I mean, one who actually VOTES for those things, rather than just talks about them. Oh that's right, you have. Ron Paul. They call him a wingnut.

One last point. Wars are the single most inflationary thing you can do to an economy - and that comes from the money-printing required to fund those wars. You print money, spend it to make bombs, and then drop the bombs and they're gone. It's like blowing up money - except the stuff the money bought is gone, but the cash floating around the system still remains, eating away at the savings of every American.

And wars have cut across party lines: leftists, and righties have in an equal opportunity manner gone to war time and again in our history, printing money to pay for it. Johnson + Nixon = Vietnam. Bush + OBama = Afghanistan + Iraq.

But you won't see this movie playing on any of the major networks. Otherwise you might be tempted to escape from your thought prison and that's dangerous to the status quo.

showing in my sentiment indicators in the last couple of days. There is a significant measurable increase in Rydex short activity.
Except for Dollar that shows a dramatic spike in bullishness.
My take (contrarian): upcoming spike up in equities and PM and spike down or consolidation in U$D. This could be short lived of course but possibly intense.

It's been said before but nonetheless:

Dec. 14 (Bloomberg) -- Falling production in commodities from rice to milk is bad news for just about everyone except investors.

Rice may surge 63 percent to $1,038 a metric ton from $638 on Philippine imports and a shortage in India, a Bloomberg survey of importers, exporters and analysts showed. The U.S. government says nonfat dry milk may jump 39 percent next year, and JPMorgan Chase & Co. forecasts a 25 percent gain for sugar. Global food costs jumped 7 percent in November, the most since February 2008, four months before reaching a record, according to the United Nations Food and Agriculture Organization.

http://www.bloomberg.com/apps/news?pid=20601109&si...

This, in a period where Fleckenstein suggests that while the market may not flop as a whole, but:

"Maybe the market will get "rangy" and see a sorting-out process. By that I mean some stocks could trade higher, others lower, and they wouldn't trade so much in lockstep, as they have for much of the year since March."

http://articles.moneycentral.msn.com/Investing/Con...

Not hard to imagine where commodity ETF's would be in such a market.

1)Feed the ducks when they’re quacking. That’s the refrain I heard endlessly on the trading floor at my alma mater, Morgan Stanley. If the clients want something, give it to them in spades, whether it makes any sense or not. So the sky must be darkened with uncountable flocks of our flying friends when I see two of the biggest equity issues in history in the same week, $25 billion for Bank of America (BAC) and $20 billion for Citigroup (C).

Besides diluting the daylights out of the existing shareholders, the great problem I have with these issues is the terrible fundamentals that still bedevil the industry. You know these guys are engaging in blatant window dressing to get this paper out the door, extending and pretending until their noses grow to Uzbekistan. Their willing co-conspirator is the Federal Reserve’s Ben Bernanke, who used the almighty weapon of zero interest rates to engineer one of the greatest stock rallies in history to get bank shares off the floor.

Revenue quality is terrible, earnings visibility is nonexistent, home foreclosures are still accelerating, and commercial defaults may not crest for another three years. You know whatever capital they are raising now will be consumed by write offs next year, and more capital raisings will have to follow. Napoleon’s 1812 retreat from Moscow comes to mind. If someone is pointing a gun at your head forcing you to buy bank shares on pain of death, only look at the small ones, like Hudson City Savings (HCBK), Westamerica (WABC), and Bank of Hawaii (BOH).

http://blog.madhedgefundtrader.com/

Where is that quote from?

Things are coming to a head, Lines, and Triangles and Bens, oh my!!!!

http://screencast.com/t/ZTFkNzJkZ

Loannetter-
I appreciate your advice and normally I would say because others are doing the wrong thing doesn't mean you should also. But my son's fiance has faithfully paid the mortgage on the property and bought it with 10% down. Now this 1bdrm unit is really small. When they first decided to sell because they needed more space they were willing to eat the loss and come up with the extra cash by taking money out of their 401k and IRA plans. Up to now they have faithfully paid the mortgage on time. However now the market has dropped so much they don't have anywhere near the amount to cover the loss let alone a deposit for the new place. After reading the article about people in CA walking away from property so they can pay for the beamer or take the family on a cruise-I said this is not right. They need to do what is right for their family. Stop paying the mortgage and put the money aside. Find a new place before they get married and my son will buy and finance in his name. Let the government-oops, meant the banks figure out what to do with their old condo. They know she will take a hit on her credit rating but if it eventually went through a short sale she will take almost the same hit. When I played sports there is a term "payback". Maybe this is governments payback for distorting the market.

While I like a lot of what E. Warren has to say she has no power. David Walker warned for his whole time as US Comptroller General (1998-2008) and no one listened.

Warren was tougher earlier in her charge that Paulson lied about where the money went and never explained missing $ billions. We can now assume that went to the bank stock purchase slush fund.

I want more than a scapegoat — I want congressional reform. We are tougher on a Private who falls asleep guarding a PX than these guys who are supposed to guard our entire economic system.

There are many people we can name who participated in a multi-decade scam to rob us and future generations. They have not been punished, they've been retained and even rewarded for "saving" the world economy!

People have lost their life savings, their houses, their children's inheritance, their hope and our nation is losing centuries of traditional our freedoms.

She says we averted a depression. Well, I see a lot of severely depressed people around here.

And I see no justice anywhere anymore. I hope the tea parties continue to build in their anger and demands for justice